Although the IRS scandal has been perhaps somewhat overshadowed in the past couple of weeks by the roiling vortex of Scandalmania and especially the NSA surveillance story, Congress has been making steady progress on investigating what really went down at the Internal Revenue Service during the two-plus years that Tea-Party groups were consistently and specifically thwarted in their applications for tax-exempt status — and the administration’s fallback story that the IRS’s especial behavior was an outlier case of a few “low-level,” “rogue” agents, and that D.C. had absolutely nothing to do with it, just keeps getting thinner. In her testimony, Holly Paz — the same IRS agent that was reportedly the first to be fired in the scandal — said that she was personally involved in scrutinizing some of the earliest applications from conservative groups:

Holly Paz, who until recently was a top deputy in the division that handles applications for tax-exempt status, told congressional investigators she reviewed 20 to 30 applications. Her assertion contradicts initial claims by the agency that a small group of agents working in an office in Cincinnati were solely responsible for mishandling the applications.

Paz, however, provided no evidence that senior IRS officials ordered agents to target conservative groups or that anyone in the Obama administration outside the IRS was involved.

Instead, Paz described an agency in which IRS supervisors in Washington worked closely with agents in the field but didn’t fully understand what those agents were doing. Paz said agents in Cincinnati openly talked about handling “tea party” cases, but she thought the term was merely shorthand for all applications from groups that were politically active — conservative and liberal.

Paz said dozens of tea party applications sat untouched for more than a year while field agents waited for guidance from Washington on how to handle them. At the time, she said, Washington officials thought the agents in Cincinnati were processing the cases.

Hmm — that certainly is quite a bit of bureaucratic incompetence and miscommunication that was oh-so-conveniently directed at a pretty huge sampling of what just happened to be conservative groups. Meanwhile, over at NRO, Eliana Johnson reports that pro-Israel political groups are also getting some special treatment in the form of their tax-exempt applications getting routed through an IRS anti-terrorism unit for additional screening. Again: Hmmm…

Asked whether Jewish or pro-Israel applications are treated differently from other applications, Gary Muthert told House Oversight Committee investigators that they are considered “specialty cases” and that “probably” all are sent to an IRS unit that examines groups for potential terrorist ties.

Muthert, who served as an application screener before transferring to the agency’s antiterrorism unit, was interviewed in connection with the committee’s investigation into the IRS’s discrimination against conservative groups. As a screener, Muthert flagged tea-party applications and passed them along to specialists for further scrutiny. …

On March 27, 2009, the day after Ignatius’s article appeared, the Arab-American Anti-Discrimination Committee (ADC) filed a spate of administrative complaints with the Treasury Department and the IRS, alleging that pro-Israel groups raising funds for settlements in the West Bank were supporting “illegal and terrorist activities abroad.” Later that year, in October, the ADC said that it was waging an ongoing legal campaign against the IRS for what the ADC regarded as violations of the tax code by some pro-Israel groups.